Our corporate subscriptions are designed for companies who want to purchase access for 10-100, or 100+ users, giving their business complete access to the data, insight and news CN provides - plus benefit from a significant cost-saving

Growth upturn hampered by civils and commercial declines

Infrastructure and commercial activity both declined in November but housebuilding boosted overall construction output, according to the latest IHS Markit/CIPS PMI.

November’s purchasing managers’ index jumped to 53.1, up from 50.8 in October, putting it comfortably above the 50.0 threshold for an increase in activity.

This is the fastest rate of expansion in five months, with growth in housebuilding offsetting declines in infrastructure and commercial building.

Infrastructure activity contracted for a third straight month – its longest period of decline since 2013.

However, infrastructure’s slide in November was marginal, according to IHS Markit/CIPS, with some respondents to the PMI optimistic that more work would come through in the energy and transport sectors soon.

Commercial building also posted another month of contraction, with the weakness attributed to “Brexit-related uncertainty” and “subdued economic outlook”.

CIPS director for customer relations Duncan Brock said: “It appears that policy support and a small recovery in the UK economy has boosted sentiment and encouraged clients to come out of their shells and start building again.

“The housing sector was the primary driver of growth, increasing at its fastest rate for almost half a year.

“However, it is private sector companies that need to commit to big-ticket spending, with commercial development still underperforming as persistent Brexit uncertainty continues to bite.

“Concerns over civil engineering in particular are also prevalent with its downward course the longest since 2013 and linked to a shortfall of new tender opportunities.”

“Business optimism across the construction sector remained relatively subdued, but picked up from the near five-year low seen in October,” he said.

“This represented the first improvement in confidence for three months, which construction firms attributed to increased sales enquiries and hopes that risk aversion among clients will recede over the course of next year.”

CPA director of economics Noble Francis warned against getting over-optimism following November’s data, however, suggesting that commercial work in particular faced strong headwinds.

“Commercial construction activity continued its trend in recent months: projects signed up to prior to the EU referendum finishing and not being replaced as Brexit uncertainty continues to hit demand from the financial sector for new, additional office space – particularly in central London,” he said.

“The fall in commercial offices new orders over the past year suggests that these falls in commercial activity will continue in December and in 2018.”

Prof Francis also highlighted a significant obstacle to infrastructure investment from the government.

“Government continued to make big announcements in the Autumn Budget last month, highlighting a £600bn pipeline of projects,” he said.

“However, the key issue in infrastructure isn’t a lack of announcements. In fact, it isn’t even a lack of capital investment.

“Infrastructure activity appears to be suffering from a delay in government delivery of major projects.”

Have your say

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.